Many Dallas-area consumers dealing with debt in collections

Could Dallas-area residents really be that bad at managing their credit?

Last week, the Urban Institute, a Washington-based think tank, released a study that showed that 35 percent of Americans have debt in collections on their credit report. Ouch.

But the figures for North Texas were even worse. In the Dallas metropolitan area, 44.3 percent of residents with a credit file have debt reported to collections, according to the study.

Even with as much trouble as Texans have had managing credit, I found that figure to be astoundingly high. So I spoke with my credit experts to see if they thought it was far-fetched.

Todd Mark of Consumer Credit Counseling Service of Greater Dallas said he wasn’t surprised by the number.

“How many stories have we done in the past where Texas is always 49th in the United States in credit scores?” said Mark, the organization’s vice president of education. “We’ve always trended very low in credit scores.

“Good times or bad,” he added, “Dallasites seem to lead with a higher rate of not meeting their obligations — maybe because they carry too much debt to begin with.”

Mark cited a report in May by credit bureau Experian that said Dallas-area consumers shoulder the highest debt among residents of the top 20 U.S. major metropolitan areas.

The Experian study said the average debt per consumer in the Dallas area was $28,240. Nationally, the average was $25,927.

According to Experian, the Dallas area’s average debt has soared 7.8 percent since 2010.

You could interpret that two ways:

Residents of Dallas-Fort Worth are beneficiaries of a booming economy and are able to take on more debt.

Or, given the debt we’re carrying, we’re doing a poor job of paying it off.

Actually, both are true. It’s also true that Dallas-area consumers need to improve how they manage debt.

“We in Dallas tend to be pretty willing to take on debt as compared to the rest of the country,” said Rod Griffin of Experian. “We have some of the highest average debt in the country. That in and of itself creates some concern.”

Over the last four years, the average credit score in Dallas has “increased a bit,” Griffin said, even though debt has gone up as well.

“What that tells us is we think that the economy may be shifting positively, so people are more confident in their ability to manage debt and so are taking on additional debt,” he said.

The Urban Institute study, which looked at data just for last September, showed that the average debt in collections for the Dallas metropolitan area was $5,084. Statewide, the average debt in collections is $5,049.

Debt past due is most concentrated in the South, including Texas, according to the study.

Service and construction jobs are predominant in Texas, which historically have been unstable industries.

Texas is considered a big retirement state.

“Retirees living on a fixed income with higher health care costs and past-due medical bills can add up to a large amount of debt,” Salazar said.

More families are living paycheck to paycheck. They may use credit cards to pay bills if little or no money is set aside for emergencies.

Most people look at their credit report only after being denied a loan. Many are surprised to find medical bills and collection debts on their report.

“There could be an error on the [credit] report,” said Caroline Ratcliffe, a senior fellow at the Urban Institute and co-author of the study. “Some consumers may not know that they have that on their credit report. This debt in collections can stay on somebody’s credit for up to seven years.”

That’s why it’s important to pull your credit report regularly to check for errors. You’re entitled by law to a free credit report every 12 months from each of the three national credit bureaus — Equifax, Experian and TransUnion.

Go to annualcreditreport.com to get your report.

Obtaining credit isn’t a bad thing. But taking on more debt than you can handle and being late paying it back is.

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About Pamela Yip

MOST UNFORGETTABLE EXPERIENCE ON THE JOB: Covering the 1997 handover of Hong Kong by Great Britain to China.

SOMETHING PEOPLE DON'T KNOW ABOUT ME: I enjoy legal affairs issues and would also love to fly a large commercial jet, such as the Boeing 777.

IF I HAD TWO SPARE HOURS, I WOULD: Get my friends together for a relaxing get-together with food and laughs.

THE GREATEST CHALLENGE TO COVERING BUSINESS IN NORTH TEXAS: Constantly making sure that I'm providing my readers with valuable personal finance
information they can use in their lives and presenting it in a way that's interesting and engaging.

Hometown: Sacramento, Calif.

Education: Bachelor's in journalism, with a concentration in economics. A graduate of the personal financial planning certificate program at the University of Houston. More than 20 years as a journalist, including 15 years as a business journalist.